Cheap dodgy products are really good (for retailers)

Four days after Christmas, I started to think about what kind of product recalls we will be hearing about in the early part of next year. Toys, clothing and generally everything has never been cheaper in Australia since manufacturing got so cheap in China (and now, Africa). As a retailer, it makes perfect sense to sell cheap, potentially risky products. And many have because now you see products in major retailers that really makes you wonder how they afford to sell those products so cheap and still make a massive profit. What really are these things made of? 

Despite being a major shipping route from China, visitors from Singapore have started to catch on that it is cheaper to get baby goods and children clothing in Australia compared to where they are from. So what happenes when a retailer sells a dodgy product? All you get is a forced recall. When you are selling thousands of lines of items at huge mark ups, a few recalls has no material impact on profit. After all, how many people who bought a product subject to a recall actually respond to a recall? We have Samsung washing machines still floating around that potentially could explode and even that risk hasn't ensured all people respond to the recall. 

So as we are always reminded, caveat emptor, or buyer beware, could never be truer than our current retail landscape. 

Why you need to watch Kogan!

There was a time I despised the name, Kogan. It was just like many other players in the business, touting their own TVs or computers. However, over the last few years, Kogan has shown that it is more than about selling used TVs.

It was probably the time when Kogan bought the failed Dick Smith brand that really got me. They relaunched the iconic electronics store a few weeks after that as an online store selling a mix of Kogan products along with what they used to sell. 

Then they started reselling Vodafone mobile plans and prepaid sims at prices that beat their provider's offeirngs that had me thinking of buying in to their stocks. Now, Kogan is worth twice the market capitalisation of Myers and is nearing their Unicorn day, when they will be worth $1 billion dollars. 

However, there are good reasons for me to think that this is not a passing fad or a house of cards like the Big Un. Firstly, it is the attention to detail of their CEO Ruslan Kogan. The fact that he sees his company as a statistics company masquarading as an online business should have people worried about how big Kogan is going to get. 

Everything that they have entered into recently has been based on their own customer analytics. Their influence is growing as they acquire new customers every day, practically giving away sim cards in exchange for access to customers' inbox. From there, they can find out whether you clicked on the email about furniture, which furniture you were looking at and when you came back through a google ad back to that same furniture, before finally buying that product. With millions signed up to Kogan, even if there are some which are duplicate customers, this means that Kogan has behaviour analytics that you are now reading about all over the news - Facebook, Putin, Cambridge Analytica, 

 The fact is, Kogan can start providing health insurance, life insurance, car insurance, financial products even mortgages in future, using their analytics to determine how much commission each of these ventures are generating and which new ventures they should pursue. So when Kogan announces they are going into the Pet Insurance business and launching Life insurance products, you have very good reason to be excited because they would have gone to these businesses with the analytics to convince them that Kogan would be good for their business. 

Whether you are Vodafone or Hollard Insurance (pet insurance), why wouldn't you let someone else get you customers, do your online marketing and retain your customers, for a reasonable commission? Or rather, why wouldn't you want to be Kogan's only provider for your type of product? 

On the Kogan website, everything is being sold on there. Much of their product range are their own brands, which means that they have a higher margin. However, there are many other products there that probably help to build people's comfort with purchasing from Kogan. Many of these products I would imagine to be a drop ship arrangement with the supplier. The downside of the Kogan experience is that it is very easy to buy something and very difficult to return products due to fault or change of mind. The talk of Amazon taking the Australian market by storm still has not eventuated and all such hype has benefited existing players like Kogan. 

I've experimented with Kogan Mobile and it is very interesting what Kogan has done with Vodafone's product.

1. They signed up with Vodafone at a time Vodafone lost many customers and spent billions of dollars expanding their mobile tower capacity. 
2. The time taken to port in to Kogan seems to be unusually fast. 
3. They have been giving away 28 day sims, which most businesses know, will lead to many long term customers who can't be bothered switching out after the 28 
4. With a few days left of your prepaid sim, every time you call someone, they remind you that your sim card is going to run out in a few days and to login to koganmobile to recharge. 
5. They started selling buy one get one free 365 day plans which I know of a few people who have taken up this offer after getting free sims to try out. 
6. Their data speeds have been very fast. 

Their shares today touched $10 for the first time before dropping back like an excited toddler. Be sure that as Kogan grows up, we'll be talking more about Kogan as a household name. 

Purchasing through Apps is so 2017 - 7 Eleven, BPme, Baskin & Robbins

With our constant attention on our mobile devices, and the fact that we are getting lazier and lazier, one emerging trend is that we have been bombarded with apps. Recently, 7 Eleven brought in an app with an innovative idea - you can lock in a petrol price from today and fill up a few days later when you do need to get fuel, at today's price. However, you need to pay first via the app even before you get to the petrol station. The advantage is cheap petrol any time you want and you don't need to line up to pay for your fuel once you are done and drive away legally. Of course this could have a cannibalising effect on their in-store purchases. For that, the 7 Eleven app also offers in store specials like free coffee, free fruit, free iced coffee and special pricing for many of their products - all redeemable via the app in store.

Then this week Baskin & Robbins enticed their mailing list to install their app with a $10 incentive to sign up. This also takes your credit card details and enables you to order your ice cream via the app. Not sure what this serves except to enable B&R to advertise to you directly via their app. 

Also launching recently is the BP petrol station app BPMe. This was promoted via AMEX and also advertised on TV as a new way of paying for your fuel. There have been teething problems for those early adopters, some didn't get their credit card charged, some got declined after they left the petrol station, others couldn't even get past unlocking the fuel pump via the app. For mothers and fathers with a carload of kids which need to come into the store every time you fill up, apps like these when they work will be very popular! 

This summer, Maccas has also decided to up their app game. They've experimented with at least three types of apps and their newest one is called Ordering if you can't find it in your app drawer. They are offering a special offer every day of the summer. Today was a $3 double cheeseburger and tomorrow is a free hash brown with every purchase. Thanks to ozbargain, here are the upcoming in-app offers - 

• Thursday, 14th December 2017 - Free Hash Brown with any burger purchase
• Friday, 15th December 2017 - Free large sundae with any large fries purchase
• Saturday, 16th December 2017 - Buy a McFlurry, get a Free Apple Pie
• Sunday, 17th December 2017 - Buy a 6 pack of Nuggets, get $2 off Hotcakes
• Monday, 18th December 2017 - Free side salad with medium or large Qtr Pounder, Filet 'o' Fish or McChicken Meal

Hungry Jacks Shake and Win app has been around for a while and still proves to be very popular. If you didn't know this is how you can get free food once a day. Free orange juices or free coffee in the morning are quite regularly offered. Free fries and free large cokes come up quite a bit as well. 

With so many business apps, which app plays have impressed you? 

Mango Heist - Nandos Admits PR Campaign

With the help of a small country town that would benefit from millions of dollars worth of free advertising, Nando's undertook a raid on one of Australia's greatest landmarks - the Giant Mango from Bowen. Under the cover of darkness, the Mango was taken, leaving the media the next day speculating how such a large monument could be "stolen" overnight. The news traveled to places that wouldn't even know where to put Sydney on the map of Australia and the other day, Nando's owned up to the PR stunt to launch their Mango and Lime sauce for their peri-peri chicken.



Nandos specialises in guerilla advertising with campaigns aimed at the national consciousness whether Australia is talking about a corrupt politician or a drug smuggler. Everything can become advertising nirvana for Nandos.

Great strategy Nandos.